This magazine is suppose to be a magazine for "thinking mothers". The article is basically the saga of an individual that tried an mlm and failed, so of course, any and all direct sales companies are now bad and for facts to back up these statements, they just use statements from other disgruntled people that didn't make money when they were involved in these companies. I like to try to stay objective in my articles and I promise to try with this one, however I feel this needs to be brought to light. PT/TC is just gloating over the mention of their site in an article against mlm's that was published in the above mentioned magazine. For your convenience, if it works, I inserted the link if you would like to read the whole article.
http://www.brainchildmag.com/essays/summer2008_schultz.asp
I know that personally, I have read often on that other site, the statement that "99% of all people in Mk loose money." I never could figure out where this "fact" came from. Well, I think I finally got my answer. Now the next several paragraphs are from the article (in italics) after I post it, I would like to point something out. - I changed the color of the text to red in the points I would like to "debate".
Billion-dollar companies like Herbalife, Mary Kay Cosmetics, and Arbonne International, to name just a few, are structured on the MLM model. Most operate roughly the same way. New recruits are required, or at least strongly urged, to buy inventory up front which they sell to their friends, relatives, and acquaintances, usually via parties held in their homes, or in the homes of friends. Selling the actual products is one revenue stream, but as Lopez’s Herbalife team told her, the real money is made when you convince others to sell, too. If you’re lucky enough to find two or three people to sell through you, and if they have the skills to find others to sell for them, you could be sitting at the peak of a nice mountain of revenue. With Herbalife, for instance, Lopez says, “Every time one of your recruits sells something you receive two percent. You’re receiving money from three people below you: the person you recruit, the person they recruit, and the person that person recruits.” A sweet setup, in theory. In reality? Not so much. “This is a deadly business model in which you are doomed to fail,” says Robert Fitzpatrick, president of Pyramid Scheme Alert, an Internet-based watchdog group located in Charlotte, North Carolina. “There’s a ninety-nine percent loss rate”—meaning the vast majority of people who start MLM businesses end up losing money. You’d have a better chance betting your life savings on a game of blackjack in Vegas, he says, than you would putting it all into a multi-level marketing home business.
Now, I may not know everything there is to know about MK but, a recruiter only gets a percentage of her personal team. (Yes, a director will get on a commission on her unit members) but a recruiter will not get a commission from "three people below you" - only the people she personally recruits and the theory is that is to help the "recruiter" and compensate her for the time she will spend mentouring her new team member, which will take time away from her time she could be spending selling. And even though this Robert Fitzpatrick has made this statement, there is no report or explantion to back up this statement. Ummmm..... okay, why is it okay for this entire article backed up only with an individual view points to slander Companies because some Joe Blow makes a statement, doesn't make it true. So after reading this, imho, PT has proved what MK people have said all along, we are not an mlm.
Further more, this article does nothing to help people from falling pray to the pitfalls of a direct sales or mlm company, and that focusing on sales as your primary objective and team building secondary will help you earn far more money than simply recruiting, it just shows how some people make very poor decisions. They also have a blog for discussing the article connected with the article, some interesting comments and of course, I put in my two cents.
And I would like to add, next time you want to have a debate with someone about the benefits of a Mary Kay career and they start arguing, please feel free to just tell them that, "mk4me states that if you treat your MK like a business and build your customer base strong and team build second, don't buy your recognition, sell your products - don't discount everything, provide good customer service, don't inflate claims, don't lie, stay informed about the products, and don't expect people to knock your door down because you are now "a MK consultant", and you are willing to leave your home and your children for more than 10 minutes, you will be able to make money in MK and the longer you stay in and continue to take care of your existing clients and continue to add more new clients, you will be able to continue to increase your income." Bam, end of arguement. How could they possible argue with mk4me, it has to be fact, I said it, right???
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I think the quote you point out is attributed to a HERBALIFE distributor, not a MK Consultant.
ReplyDeleteBUT what I took from that quote "You’re receiving money from three people below you: the person you recruit, the person they recruit, and the person that person recruits" was that means the people down the line are writing a check to their recruiter. Did I read that right?
If so, that's a MAJOR difference with Mary Kay. My team members ALWAYS sell their product for retail and buy it for the same 50% wholesale that I do. And they can earn the same 50% gross commission (that's before expenses, hostess credit, etc.) that I do. My team building commissions come from Mary Kay's 50% NOT from my team member's 50%.
The author of the article clearly did not do a good job researching her piece. Just look at how the article starts out . . . this woman Nicole Lopez misses her kids, blah, blah, and goes to a website, gets sucked in emotionally and clicks an icon (WITHOUT even knowing the name of the company!) and she's suddenly got a packet of info (still the company is unknown) and then she's on a phone call with people she's never seen or heard of before? So she sinks a bunch of money into this WITHOUT EVER TRYING THE PRODUCT?????
Ya, no. I do not feel sorry for ANYONE who does that. I don't mean to sound cold and mean, but from the first few paragraphs of the article, I don't even know why we were included.
Do any real Mary Kay consultants recruit that way? Mary Kay Ash would rise up out of her grave and hunt us all down if we did. There are just so many things wrong with that whole scenario I can't begin to point them all out, but make no mistake, I do not feel sorry for anyone who starts a business without knowing anything about the products, without ever having tried them, without ever having personally met anyone involved with the Company.
My biggest question is why is this article so one-sided? Why didn't she contact anyone from MK or Herbalife or Arbonne? It seems to me the author simply wanted to write a smear piece.
darci, thanks, I started writing this with one of the points that I wanted to make and forgot to make it I got so involved with the other issues I had with it.
ReplyDeleteWe, MK'ers say, we are not an MLM, we are a dual marketing / direct sales company. Of course, pter's, anti mlm people, don't seperate things out, lump all of the direct sales Companies together and then when I read this article about a recruiter earning from the recruit, from the recruit's recruits, and down the line, that is truly what I have read that an MLM is.
That is not how Mary Kay operates, so by the anti MLM er's statements, that means MK is not an MLM. If a consultant in MK decides simply to sell product and uses care with her expense, she WILL make money. In order to make money in MK, you do not need to recruit. (This can be done, I have several unit members successfully selling product w/o recruiting and making money.)
I have many unit members that do MK parttime, they don't have team members for them 50% of a sale to a customer is putting more money in their pocket than 4% of a team members wholesale order. Now if someone asked them to join MK they wouldn't turn them down but they are not out there stalking people begging them to join MK.
And... sorry, but I posted a statement on the magazine article saying that if anyone is considering getting into any type of business, they should research before jumping in and spending their time and money.
An anti-mlmer decided that, my statement is rude because I suggested people research something before they jump into something!!!!
hmmmm.........................
I have some land (in the swamps in Fla) I would love to sell you!!
Well, when I was recruited, it was with the idea that I could earn "executive level income for part time hours." Is this not how many MKers recruit? Is it not? Executive level income is at least $70,000 annually in my opinion.
ReplyDeleteAre there any IBCs (with no recruits) who gross $70,000/year just from their sales? And with only part time hours? This is where IBCs get disillusioned and hurt because that is what they are led to believe.
The truth is you may make some extra money, but that's it. You won't be fully funding your kid's college education by only selling the product. As a recruiter, you have a "team" under you. You also have a recruiter/director above you. With a National above them. This is known as a heirarchy. A heirarchy has levels. And there's more than one level so that makes them multi-level. At each level, you make a larger commission based on the number of levels below you and how much they order(different from corporate America where you make $$ based on your abilities and skills, not on how may people report to you). Otherwise, a director could make just as much as a National. Why can't they make just as much as a National?
One National has many directors below her. Each director has many more Team Leaders and IBCs below them. One at the top, slowly getting wider and moving to many at the bottom. What shape does this remind us of?
Levels make up a pyramid. Many IBCs are required to support the executive level income (oh, there it is!) of the one.
Yes, this business model is currently legal. That doesn't make it healthy.
If there weren't problems inherent in the business model, there wouldn't be a PinkTruth.com or a story like this article.
Oh, gosh...this is a long post. Sorry it's so rambling.
Oh, gosh, I sounded snotty on the heirarchy part of my post. Didn't mean it that way. :) I was working the idea through. I know you guys know what a hierarchy is.
ReplyDeletefirst evesvy, your contributions are great and they don't sound snotty! Thank you for taking the time to post, it is helpful to all.
ReplyDeleteevesvy, you said, Otherwise, a director could make just as much as a National. ...
Well, I can tell you, there are directors making more than nationals, especially directors with working units, as oppossed to Nationals that may have focused on recruiting and big inventories and not selling products.
I have seen consultants who are strong in selling make more than a director who is only recruiting and hoping the commissions will take care of everything. (Sad statement but true)
If you remove selling from the equation, things don't work the way the are suppose to in the long run. Eventually, those may look successful, but we must remember what goes around comes around. Lack of selling within a unit will eventually catch up to them. Yes, you will find a few that can run fast enough to out run it, but for the majority, it will lead to their downfall.
mk4me,
ReplyDeleteI think what you describe is EXACTLY the reason MK needs to go back to DIQ only AFTER a consultant has earned a car with 12 consultants.
Personally, I joined MK when the requirement for going into DIQ were 12 and I think you had to have earned the car. Then they changed the rules so you only had to have 8 to go into DIQ and you could pick the car up along the way.
It's my opinion that this is where a lot of the problems started. It's not so hard to get to 8, especially if some are personal use. And they just have to be active, which means you could have 8 who all join with $200 orders and BOOM you're a Future Director and can submit DIQ.
Today, we have directors who don't have cars and who have never even earned them. Directors should be PROVEN leaders. With working consultants.
Sure, if we went back to the old way it would mean up to 8 months in qualification mode, but everyone says when you finish DIQ that the key to success as a new director is to just keep doing what you were doing in DIQ. So big flippin' deal to do 8 months at a minimum $4000 a month before becoming a director. If you could do that, I think you'd be practically guaranteed to remain successful with a working unit.
Of course, that's just my opinion.
That is why their "research" is flawed. This guy lumps Mary Kay in with companies that do pay on every level down, Mary Kay does not, ever.
ReplyDeleteIt is my opinion that the PT contingency is combing the planet looking for anyone who will print their dribble. Notice that those mentioned are all in the same boat? Pay close attention to the names in the article, you've heard them all before. Who is to say that they didn't beg the mag for this article?
That Scrib person (is that the Scribbler) admits to never having even been in Mary Kay, yet proclaims to be an expert. Kind of like researching a country, but never having been there, compared to those of us who live it every day.
Thanks, mk4me, I didn't know that there were directors who earned more than nationals. The nationals are touted as such goddesses, it just didn't seem possible. I stand corrected.
ReplyDeleteWhy do you guys think they lowered the requirements for DIQ? What purpose could that have served? Forgive my PT side, but it sounds like a move to get more recruiting going along with more initial orders...
Enevsy
ReplyDeleteLook at the applause magazine and you will see there are quite a few top directors who make more than some Nationals. Heck there are some directors in the 4-6k a month range who know how to manage their money and they have been in MK for years and make good money because they are good money managers and dont buy million dollar homes!!!
They didn't lower the requirements to become a director (it was 30 unit members + 16,000 production before too). What they did was lower the threshold to get into qualification. Sorry if what I originally posted about this was confusing.
ReplyDeleteI honestly don't remember why they did it. I think it happened in 2000. My guess is that they wanted to create more directors. And while I'm sure it had that effect, I think (as a consultant who has been building her business for 10 years profitably the entire time) it had the unintended side effect of building weaker units.
I mean, if a director hasn't ever earned a car how can she credibly stand before her unit and say it's possible?
In our unit, my director has NEVER begged for orders. We are a Cadillac unit a dozen times. Not a dozen years - a dozen times. That's 24 years. And in the 10 years I've been in MK, our unit has never done less than $425,000, but are usually between $500,000 and $650,000. And no, we don't have 400 consultants. We have a smaller WORKING unit.
I agree that it's possible to sell product and earn good money. without a huge team. But I also think that what every consultant wants out of her business is different. So to lump everyone together and use some arbitrary amount of money to define success isn't right, in my opinion.
People also assume that NSDs earn money on everyone in their area, they do not.
ReplyDeleteAnother key point is that you can pass up your recruiter/director on the career path at any time, so the family trees in Mary Kay often do not even resemble a pyramid in shape. I currently earn more than my recruiter or Sr. director.
Oh! I forgot about that! We don't have to wait for our recruiter to move up for us to move up! Yeah for that!!
ReplyDeleteGreat point strt, my recruiter is not a director, I believe she is a red jacket. So her not wanting to be a director didn't prevent me from becoming one.
ReplyDeleteAnd yes, if I remember right the change was to have more directors, but I will also admit, it has created weaker directors and also it puts a consultant in a leadership role, quite often before she is ready to handle the responsibility. By reducing the number needed to start, I think many consultant go into DIQ before they are ready or armed with the knowledge and experience they need.
I know if the Company changes it back, there will be alot of anger consultants, but I would rather see strong directors and units, than watching weak directors having to step down, this isn't good for the director or the unit watching the meltdown.
I also think more of the big inventories and the big push on recruiting starting happening when this change was made.
I agree w/ you MK4ME about the larger inventories starting at about the same time as the lower requirements to go into DIQ. I think it's a relatively new thing.
ReplyDeleteI remember being at an Anne Newbury training a few years ago for team leaders and above and she specifically told us to start recruits w/ 600 or 1200 and teach them to turn it over quickly. They would see product move and they would build their business with very little or no debt (using their sales to build their inventory) and they would not get overwhelmed and paralyzed by boxes and boxes and boxes of stuff arriving.
Increasing the DIQ requirements from 8 to 12 + car would anger some people, but I think that it could be done over a period of time and it would be ok. Plus, it seems to me that requirements do change over time. Didn't car production also used to be 16,000 and then they raised it to 18,000? Things change and I can't imagine that the IBC agreements don't allow for that.
Increasing the requirements to enter DIQ would also have the added benefit of shutting up quite a few of the PT-like folks, I would think. Stronger directors would have stronger units and probably less pressure to order, fewer car co-payments, etc.
darci -- was that training right before leadership conference about 2 years ago?
ReplyDeleteIt was 3 years ago I think. It was in Nashville and I think it was right after her Leadership Conference, not before. The other thing I remember is that Gary Jinks, Sean Key, and Tom Whatley stopped by.
ReplyDeleteWere you there? Did you hear her say the same thing?
Personally, I look at Anne's words about everything as the words of Mary Kay herself. If Anne says it, I do it. I follow that advice to this day about 600/1200 new recruit orders. I completely agree with it. I show them ALL the options, but tell them it's my opinion that the best place to start is 600 or 1200.
They don't always listen to me and they sometimes come in with bigger orders, but I think it's the right thing to do. Especially over the last 12 months as I've known about the upcoming product changes. I really focussed them on skin care and told them about the upcoming color changes.
Yes, it means lower commission for me initially, but I'd rather have a team member look back and say "thanks Darci for putting my interests over yours" and trust me and stay in MK longer (or forever!) than to get overwhelmed with a 3000/3600 order and send it all right back. I figure it pays off in the end.
Amen Darci!! and no I was at the one 2 years ago, and guess what, Anne said exactly the same thing at that one. So if we have one of the biggest nationals ever feeling that $600 is sufficient to start with, and has said it publically over and over again, why is it the only peope that are ever quoted on pt are ones, personally, I don't listen to because I disagree with their opinions.
ReplyDeleteI agree mk4me, I don't listen to those NSDs either - the ones who are continually bashed over on PT. I don't agree with them, but had heard some of them say those things on my own before PT.
ReplyDeleteMakes me believe even more that the "old timers" do it right and that some of the stuff that gets complained about over on PT is an unintended result of lowering the requirements to get into DIQ. Consultants who aren't ready get pushed to do it when they have 8. No one wants a DIQ to not make it, so directors above them do whatever it takes and tell them to do the same thing. It can be a viscious cycle.
That having been said, I AM NOT saying that everyone who's flown to the top in the last 8 years (since the DIQ eligibility rules were changed) must have done it wrong or by cheating. That's not what I'm saying at all. I am saying that changing the DIQ eligibility rules has created an environment where not doing it the MK way was tolerated.
Unfortunately, I don't know how you change that without changing the DIQ eligibility rules back to 12 + car.
I had heard somewhere (maybe I read it) that they lowered the DIQ qualifications because there had been a recent wave of retirement at the NSD level. They wanted to build more directors to build the national areas up so they made DIQ a little easier to reach. I've only been in MK for 5 years, but my goal was always to get in the car FIRST and maintain the car and THEN submit DIQ. I didn't start to really focus on the business as a business until recently when life happened. ;)
ReplyDeleteShades, I have heard the same thing about the need for more directors and NSDs due to retirements and I think that I have stated that here.
ReplyDeleteI came up under the "old" system, and I can tell you that it produces stronger directors. When you have earned the car, you have been through a qualification, and you have learned to look for working consultants. Also, you know exactly what you are getting into BEFORE going into DIQ. Most of those who came up when I did are still around, what does that tell you? It is the newer directors, since the change, that are in and out of the position in a few months time.
FYI, I have heard from a reliable source that the company is going to be changing the rules back to the "old" way.
I would love it if they went back to the old way! That would be sweet! :D
ReplyDeleteMe too! It would decrease the number of debuting directors, but would greatly decrease the number of those failing at the position!!!
ReplyDeleteCould part of the problem with these opportunities be that some people see them as get rich quick schemes? I advise potential recruits that Mary Kay is not.
How many people really want to work at things? We live in a "get it the easy way" society. I fear that many join Mary Kay thinking that it is such. While I enjoy the job, and the hours are very flexible and I can be doing things for my family while I work, I DO WORK. Directorship is a career position, we should be very clear about that. I think some complain that they were sold the idea of executive pay for a few hours per week. I don't even claim executive pay myself, nor do I promote this idea to others. We do need to be careful about what we say, what we repeat, and what we promise (I promise very little, as so much depends on them). I share my experienced and what I have seen historically, and give them the company info. No pressure, no "24 hr. deadline". My theory is that if she is super quick to sign, she is likely to be super quick to quit when she hits a rough spot. Those who really think about it and make an educated decision and commitment don't quit the minute someone says no or cancels an appointment. I'll take the consultant who has thought it over and really wants to do this any day of the week!